Cap on tax relief will dissuade major donations, survey of charity chiefs finds

Almost 90 per cent of top charity executives believe the government’s new cap on tax relief will hit donations from major donors, according to a survey by the Charities Aid Foundation.

George Osborne, the Chancellor of the Exchequer, announced in the Budget that from April 2013 the government intends to cap the amount of tax relief an individual can claim in any year to a quarter of their income or £50,000, whichever is higher. This includes tax relief on charitable donations.

The CAF survey of 120 charity chiefs and senior executives, carried out over the Easter weekend, found that 78 per cent of respondents think the government should reverse its decision.

It also found that 56 per cent of respondents believed that major donations would fall by at least 20 per cent. Half of charity chief executives said they were expecting a reduction in their own charity’s income as a result of the cap and predicted their major donations would fall by at least 20 per cent.

More than 90 per cent said the government should have held consultations before deciding to introduce the cap.

John Low, chief executive of CAF, said: "This survey shows the widespread alarm and despair among charities at the government’s decision to cap tax relief on donations.

"Major donations support a huge number of projects and services for the public good. We need to encourage more philanthropists to give to these causes, not dissuade them through the tax system."